Citigroup: China's leading AI model is gradually becoming a viable alternative to global competitors, maintaining a "buy" rating on BABA-W (09988) and TENCENT (00700).

Citi released a research report stating that the rapid iteration of AI models by Chinese developers, notably DeepSeek-V4, highlights that the competitive landscape is not one where "winners take all". The key to maintaining market leadership, according to the report, lies not just in pursuing performance benchmarks, but also in monetization strategies, sustained adoption rates, and the ability to generate revenue through API, Token usage, and infrastructure services. The report maintains a "buy" rating for BABA-W (09988) and TENCENT (00700), with target prices of 204 Hong Kong dollars and 783 Hong Kong dollars, respectively. The report points out that companies are likely to adopt a pragmatic multi-model strategy, carefully evaluating quality, capability, and cost to select the most suitable tools for specific tasks. Differentiated approaches, such as Tencent's HY3.0 focusing on real-world applications and Alibaba's Qwen 3.6-Max excelling in complex programming and reasoning tasks, are highlighted. The advanced architecture demonstrated by DeepSeek-V4 indicates a broader trend where technological gaps are rapidly narrowing, and Chinese leading models are increasingly becoming viable alternative solutions to top global competitors. This will intensify competition, providing companies with more powerful and cost-effective choices.